GAZA CITY, Gaza Strip (AP) – Gunmen from the rival Hamas and Fatah movements battled in Gaza City for a third straight day Saturday, firing mortars and grenades in clashes that killed two men in the increasingly bloody power struggle over the Palestinian government.

The deaths brought to 20 the number of Palestinians killed since late Thursday, with at least 66 people wounded and efforts to forge a coalition government at a standstill.

The latest fighting, which started late Thursday after a Hamas activist was killed in a bombing, has been among the deadliest in nearly two months of clashes.

Palestinian Prime Minister Ismail Haniyeh of Hamas issued a statement calling for calm.

But in a clear jab at the moderate Palestinian president, Mahmoud Abbas of Fatah, Haniyeh criticized “troublemakers who are trying to veer away from the path of our people” by receiving “dirty American funding and arms.” The White House is seeking some $85 million to help bolster Abbas’ forces.

The violence has been fueled by Abbas’ pledge to call early elections if the talks between Hamas and Fatah fail. Abbas, who is traveling in Europe, said this week he would move forward with his election plan if the coalition talks fail to produce results within three weeks.

Hamas, which defeated Fatah in parliamentary elections last year, opposes a new vote.

Streets in the hardest-hit neighborhoods were deserted Saturday, and only bakeries and grocery stores opened for business.

Gaza City’s main outdoor market was closed. Al Azhar University called off exams scheduled for Saturday, and the Hamas-controlled Interior Ministry, which oversees several security forces, told its employees to go home.

A gun battle erupted Saturday near the Islamic University, killing one man, according to hospital officials. In a firefight elsewhere in the city, a Palestinian policeman was killed.

Before dawn Saturday, Hamas gunmen fired mortars at the Abbas-allied Preventive Security Service headquarters and at the home of the force’s chief, Rashid Abu Shbak, officials said.

In fighting around the compound on Friday, six Hamas gunmen were killed and a seventh died Saturday of wounds sustained in that battle, said Hamas spokesman Ayman Taha.

He accused Fatah loyalists of storming a mosque near the security headquarters and executing a senior Hamas activist inside while he was reading the Quran, the Muslim holy book. On Saturday, blood stains were still visible on the mosque’s carpet and the bathroom tiles.

Fatah denied it had stormed the mosque, but said Hamas gunmen had used the mosque as a base for attacking the security headquarters.

At another Gaza City mosque, Hamas activists hung posters with photos of Hamas supporters killed or wounded in the fighting.

“These are the criminal activities of the pro-Zionist, American criminals,” the caption read, in reference to Fatah.

Mediators from two small factions, meanwhile, tried to win the release of hostages taken by the two sides. Late Saturday, seven Hamas activists and four Fatah members were freed in the southern town of Khan Younis, officials said.

Kidnappings have become a common tactic during the infighting. In all cases so far, hostages have been released unharmed. As of late Saturday, roughly a dozen people on each side remained in captivity, officials said.

Tensions have been high since Hamas swept parliamentary elections in January 2006, ending four decades of Fatah rule. Those tensions have frequently erupted into violence, killing some 50 people in Gaza since early December.

In its election campaign, Hamas promised to root out corruption and improve social services. But the Hamas-led government has been paralyzed by an international boycott and accomplished little on its agenda.

Israel and Western donors have cut off hundreds of millions of dollars in funding to the Palestinian government, demanding Hamas renounce violence and recognize Israel’s right to exist. Hamas has rejected the conditions, despite deepening poverty in the West Bank and Gaza caused by the sanctions.

Seeking a way out of the crisis, Abbas has called on Hamas to join Fatah in a moderate coalition government. Abbas, who was elected separately, hopes a moderate platform will get the sanctions lifted and allow him to restart peace talks with Israel.

Both Fatah and Hamas officials said late Friday that unity talks would be suspended until the fighting ends. Both sides blamed each other for the breakdown.

AP-ES-01-27-07 1338EST

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